Oil shrugging into new year, still waiting for a sign to recover

Oil prices appeared to stabilize Friday after the government reported a slight decline in crude inventories, bringing some calm after a week of wild market swings.

Crude rose 72 cents from Thursday to settle in New York at $45.33 a barrel, ending a week that saw prices plunge 7 percent on Monday, surge by 9percent on Wednesday and slip again Thursday. Oil prices have plummeted by about 40 percent since hitting a 2018 high of $76.41 a barrel in October.

Crude inventories were relatively unchanged last week, falling just 46,000 barrels according to the Energy Department, contrary to analysts' expectations of a much bigger drop. Still, it was the fourth straight week of inventory declines following 10 consecutive weeks of builds.

Both stock and oil markets have fluctuated recently over an uncertain outlook for the U.S. and global economies, which have showed signs of slowing as interest rates rise and trade conflicts weigh on international commerce. With just one trading day left in 2018, analysts are looking ahead to next year, when many expect the market to stabilize.

“We have all these unanswered economic policy questions, so now markets are playing wait and see for hard data in the first quarter,” said Ashley Petersen, senior oil market analyst at Stratas Advisors in Houston.

Petersen said relatively low trading volumes during the holiday week likely exaggerated price fluctuations, contributing to the dramatic swings that characterized markets. But the data released Friday contained little drama.

U.S. oil production was flat last week at 11.6 million barrels a day, down from 11.7 million barrels a day at the end of November, the Energy Department reported. The number of operating drilling rigs in the country rose by three last week, according to the Houston oil field services company Baker Hughes.

Demand for petroleum was solid. Consumption of all petroleum products over the last four weeks averaged 21.3 million barrels per day, up 3.4 percent from the same period last year, according to the Energy Department. Demand for gasoline, however, remains soft.

Gasoline inventories rose by 3 million barrels, 4 percent above the five-year average for this time of year, and motor gasoline consumption over the last four weeks fell 1.1 percent from the same period a year ago.

A seasonal demand drop and fears of an economic slowdown are holding the gasoline prices down, said Patrick DeHaan, a senior petroleum analyst for Gas-Buddy. Gas prices in Houston averaged $1.94 a gallon earlier this week, according to GasBuddy. Motorists in at least 31 states can find gasoline for less than $2 a gallon.

But DeHaan expects gas prices to snap back after mid-February.

“Demand is weak in the Midwest this time of year, and they're having trouble clearing gasoline in the Rockies as well, where gasoline is a little more landlocked,” DeHaan said. “So, when it comes to gasoline it's bearish in terms of demand.” erin.douglas@chron.com